Negative equity in car loans has reached record levels, with the average amount owed exceeding $10,000 for 20% of borrowers, Edmunds reports. Another 7.5% owed more than $15,000, alarming experts.

This reflects heightened financial strain in the auto market as consumers increasingly finance vehicles with extended loan terms. Analysts warn that this trend could lead to long-term affordability issues, particularly for those trading in vehicles with significant debt. Addressing this concern requires careful lender practices and consumer education to prevent further financial instability in auto financing.

“Consumers owing a grand or two more than their cars are worth isn’t the end of the world, but seeing such a notable share of individuals affected at the $10,000 or even $15,000 level is nothing short of alarming. A combination of uncontrollable market factors and misguided consumer financial decisions are contributing to the rise of this troubling trend,” Jessica Caldwell, Edmunds’ head of insights, wrote in a press release announcing the findings.

Read more at Edmunds